Register of Overseas Entities - one year on

It has been almost a year since the initial implementation of the first parts of The Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA), the main provisions of which came into effect on 1 August and 5 September 2022.

The Register of Overseas Entities (ROE)

The cornerstone of ECTEA was the creation of a ROE. In simple terms, ECTEA requires overseas entities (essentially companies or other corporate bodies that are governed by the law of a country or territory outside the UK) that wish to buy, sell, lease, charge or simply own property in the UK to register on the ROE. Registration requires details of the overseas entity's beneficial ownership to be independently verified and supplied to Companies House. On completion of registration, Companies House issues an overseas entity ID number. This ID number is provided to the Land Registry as part of the process of registering a relevant property transaction.

Updating obligations

Once registered on the ROE, an overseas entity has a duty to update its information annually, even if there is no change to its beneficial owners. The update is due within 14 days of the end of each 12 month "update period", the first such period being 12 months starting from the date of initial registration at Companies House. The ROE contains details of both the date on which the overseas entity was registered and the date on which the next annual update is due. As with the original submission, any changes need to be independently verified by a UK-regulated agent.

All registered overseas entities approaching their one year anniversary of registration should now be taking steps to comply with the updating duty by their individual deadlines. If an overseas entity fails to update on time or at all, in addition to committing an offence and being liable for a financial penalty, it will lose its registered status until the failure has been remedied. This effectively means it will not be able to buy, sell, lease or charge property until it has complied with the updating duty.

Considerations when dealing with an overseas entity

If you are a UK company currently buying or taking a lease or charge from an overseas entity, you should investigate when the overseas entity is next required to update the register and consider if this is likely to impact on your transaction. The overseas entity will need to be registered on the ROE and have complied with its updating duty on the date of the relevant disposition. If there is concern around timings, you may want to ask the Overseas Entity to bring forward its update with Companies House.

What can overseas entities do to prepare?

Whilst it will be the case for many overseas entities that their first update will not be due until the Autumn of 2023 or later, steps can be taken now to ensure that the information is ready for submission at the appropriate time. This will involve an assessment as to whether there have been any changes to the overseas entity’s beneficial owners since the original submission to Companies House.

Companies House will no doubt issue further information and official guidance on updating shortly. In the meantime, you may also receive reminders from the verification agent who assisted with the original filing and details on how to complete the updating process.

Future proposals

Overseas entities should also be aware that there are proposals currently being debated in the form of The Economic Crime and Corporate Transparency Bill (the bill) which are likely to extend the disclosure requirements on them. The bill includes proposals which would require overseas entities:

• To update the register within 14 days of any change to the information previously provided to Companies House.
• To update the register no more than 14 days prior to any acquisition or disposal of a freehold or certain leases.
• To provide a list of all title numbers of which they are the registered proprietor as part of the information they give to Companies House.

Although it is by no means certain that these proposals will become law, the nature of these proposed reforms suggests there continues to be a political will to increase the disclosed obligations on overseas entities. This is in line with the government's stated purpose behind ECTEA and the bill of increasing transparency in UK property ownership.